7 Billion Won Combined Heat and Power Plant in Magok... Seoul Energy Corporation Launches Seonam Phase 2 Construction

EPC Tender Announcement on September 14
Heating Supply for 74,000 Households Upon Completion in 2032

Seoul Energy Corporation will officially launch the construction of the second phase of the Seonam District Energy Facility (Magok ENS), a district heating project worth 700 billion won, to serve the Gangseo and Magok areas. The corporation announced on September 13 that it will issue a tender on September 14 to select an engineering, procurement, and construction (EPC) contractor for the power plant. After completing the preliminary processes—such as discussions on the business model and government consultations—the project is now entering the implementation stage.

Aerial view of Seonam District Energy Facility. Provided by Seoul Energy Corporation.

The Seonam Phase 2 project aims to meet the heating demand in the southwest region, including Magok District, which continues to be developed. The facility will feature a 285 MW liquefied natural gas (LNG) combined heat and power (CHP) unit, a 68 Gcal/h dedicated heat-only boiler (PLB), and a thermal storage tank. Once completed in 2032, the project will supply heating to approximately 74,000 households and 428 business and public facilities.

The project had stalled due to accumulated deficits at the corporation and debates over the project model. Options such as an outright sale or a simple consortium were considered, but in September last year Seoul Energy Corporation decided to take direct charge of the project and form a special purpose company (SPC) to share investment and risk with a power generation public enterprise. In October, Korea South-East Power was selected as the preferred bidder, and a basic agreement was signed in December.

All procedural hurdles have now been cleared. In April, the corporation and Korea South-East Power secured a gas turbine—which has been scarce globally—by signing a reservation purchase contract with General Electric (GE) in the United States. On August 24, Korea South-East Power received approval for its investment from the Ministry of Economy and Finance, paving the way for establishing the SPC and selecting the project operator.

The project also met economic feasibility criteria. In December last year, an analysis by the Local Public Enterprise Evaluation Institute showed a benefit/cost ratio (B/C) of 1.003 and a project internal rate of return of 4.63%, surpassing the respective thresholds of 1.0 and 4.5%. In August this year, a financial model evaluated by Hana Bank, the financial advisor, also met the required standards.

The EPC contractor will be chosen through a restricted competitive bidding process. Technical capabilities, such as power plant performance and technical specifications, will be assessed first, followed by a second-stage evaluation of bidding price, power generation efficiency, and unit energy production cost. Following the announcement on September 14, there will be eligibility screening, a site briefing in October, and subsequent submission and evaluation of bids, after which the preferred bidder will be selected. In the short term, the corporation plans to operate the dedicated heat-only boiler and thermal storage tank to meet immediate demand, and then add the CHP facility to address medium- and long-term demand.

Hwang Boyeon, CEO of Seoul Energy Corporation, stated, "We will work closely with Korea South-East Power to select a contractor with outstanding technology and construction experience. As a responsible project leader, we will successfully carry out Seonam Phase 2 to promptly establish a stable heat supply infrastructure for residents in Gangseo and Magok."

This content was produced with the assistance of AI translation services.